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Boston-Power, a battery maker, has joined a new coalition of companies funded by the Swedish government to develop electric vehicles. The coalition — which includes struggling auto brand Saab, electric power train developer Electroengine in Sweden, project incubator and manager Innovatum Technology Park, and Swedish power industry trade group Power Circle — has built a small number of demonstration models and plans to produce more than 100 vehicles in 2010, according to a release this morning. The Swedish Energy Agency awarded a grant of 86 million SEK (about $12 million) this week for the partners to develop the model, dubbed the ZE Saab 9-3 (an electric version of the Saab 9-3 sedan).

As far as automotive allies go for Boston-Power, Saab — the loss-making Swedish division of General Motors (s GM) — may not be the biggest coup. As the Wall Street Journal notes this morning, GM has struggled to close a deal for Saab’s assets and said last month that it would wind down the brand if it couldn’t find a buyer by year’s end. But an approximately $197 billion deal that closed yesterday with China-based Beijing Automotive Industry Holdings Co. (BAIC) will likely be enough, Reuters reports, to keep Saab running for at least three months, “meaning there is no immediate threat of the company going under.” Whether Boston-Power and the other partners can push through with the plan for 2010 despite Saab’s shaky status remains to be seen.

Today’s announcement about Boston-Power’s latest activities overseas comes in the wake of a rejection from the Department of Energy that ended the startup’s plan to set up manufacturing operations stateside. Boston-Power had requested $100 million in stimulus funds under the highly competitive battery grant program (local rival A123Systems (s AONE) snagged more than $249 million) for a factory in Auburn, Mass. In August, after the DOE rejected the request, Boston-Power CEO Christina Lampe-Onnerud told the Boston Globe, “Our issue is that we need to expand production capacity now,” in part because it was already producing batteries for several customers in the automotive market, she said, while declining to name companies.

Despite the uncertainty involved with this project, it offers a sign of confidence in the 4-year-old startup’s EV tech. Boston-Power, based in Massachusetts with manufacturing operations in Taiwan, represents the only non-Swedish company in the group. The startup initially focused on the market for notebook batteries, supplying upgrade batteries for Hewlett-Packard laptops. But nearly a year ago, Lampe-Onnerud (a native of Sweden) told us Boston-Power was working on a transportation battery, and in May the company unveiled a battery, called Swing, for plug-in vehicles.

This is what funds should be about we need cars to more eco friendly not just for now but more fore the future. Car manufacturers should be create these new cars instead of concentrating on there profits as these are the next big thing in the automotive industry.